Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers
The price index likewise increased 0.5% q-o-q in 4Q2024, alleviating from the 1.2% development in the previous quarter. Last year, industrial property rates climbed 2.1%, less than half of the 5.1% raise documented the year before.
According to Colliers, the supply of industrial sector is expected to grow this year, with over 2.5 times the supply last year coming on stream before lessening from 2026 onwards. “This rise in supply has led to today supply-demand inequality with sections of the market now seeing upcoming supply with slower precommitments or completed projects with reduced tenancy,” the file states.
Industrial property prices and leas in Singapore are anticipated to moderate this year amid a lot higher supply and weak necessity, according to a February research study report by Colliers. The firm is projecting both overall annual industrial rental and price buildup to moderate to in between 0% to 2% in 2025, contrasted to the 3.5% increase chalked up for both in 2024.
The low-key outlook enters as JTC’s 4Q2024 information suggested a market place that is “losing steam”, states Colliers. The JTC All Industrial rental index charted a 17th consecutive quarter of growth in 4Q2024, increasing 0.5% q-o-q and bringing total development for the year to 3.5%. However, this marks a significant decrease from the 8.9% rental growth logged in 2023.
The higher supply, incorporated with enhanced caution among occupiers because of persistently high interest rates and escalating operating expenses, is anticipated to continue dampening rental growth.
On the other hand, Colliers prepares for commercial need to continue to be supported by the semiconductors, logistics and advanced manufacturing industries. It even anticipates industrial leasing actions to see a steady ramp-up in time as policies become clearer and market positions improve, underpinned by the recurring upturn in the chip cycle.
In the meantime, provided the bump in supply and the projected balance in rents, this might be a good year for renters with even more choices involving market, states Colliers. “New commercial advancements, geared up with more modern specs, can encourage extra businesses to move from older, aging production spaces to more recent ventures,” claims Nicolas Menville, executive manager and head of Singapore-based commercial customers for Colliers.
Furthermore, enhanced trade protectionism has brought uncertainty right into global markets, possibly impacting organization confidence and investment choices.